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Crude oil technical outlook: WTI leaves behind bearish warning sign

WTI crude oil prices fell overnight, reinforcing key resistance; a bearish Evening Star could hint at near-term pain ahead and further loses places focus on key trendline and support zone.

Source: Bloomberg

WTI crude oil prices aimed lower over the past 24 hours, dropping almost 4 percent. That was the worst daily performance in over a week. On the chart below, a bearish Evening Star candlestick pattern appears to have been left behind as prices tested the 113.72 – 116.61 resistance zone. Further downside confirmation could hint at more pain to come.

That would bring crude oil closer towards the rising trendline from December. A breakout lower would still leave the commodity facing the critical 92.95 – 95.11 support zone, however. The latter could step in, maintaining a broader neutral trading bias. Otherwise, clearing under the range of support opens the door to further losses and a bearish technical posture.

On the flip side, crude oil could confirm a breakout above immediate resistance and overturn the Evening Star. This could open the door to further gains and a more bullish outlook. That would expose the current 2022 high, which is part of the 124.76 – 129.41 resistance zone. Now, let us zoom in on the four-hour chart for more immediate price signals.

WTI daily chart

Source: TradingView

On the four-hour setting, WTI crude oil prices confirmed a breakout under the near-term rising trendline from May 10th. That has opened the door to an immediate bearish technical posture, placing the focus on the 108.73 inflection point. Closing under this price subsequently exposes the 104.91 inflection point before the May 10th low comes into focus around 98.49. Confirming a breakout under the latter would then expose the pivotal 92.92 – 95.22 support zone.

WTI four-hour chart

Source: TradingView


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The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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